The Institute of Economic Affairs (IEA) have called on the government to reduce the rate of the e-levy tax, charged on all electronic transactions in the country, from the current 1.5% to 0.5%.
According to Dr John Kwakye, Director of Research at the Institute, the e-levy is a nuisance tax and the current high rate is forcing people to find clever was to dodge it.
Speaking at a press conference in Accra, Dr Kwakye said reducing the rate to 0.5% would end up raking the government more revenue since people would now find it easier to comply.
“We suggest reducing the rate from 1.50% to 0.50%. By doing so, it may prevent people from trying to evade the levy, and government may in the end rake in more than under the current 1.50% rate.” he said.
It would be recalled that government in March this year imposed a 1.5 percent charge on all electronic transfers above GH¢100 per day.
The tax policy was a move by the goverment to widen the country’s tax net but has since courted controversy and widespread backlash since its announcement and subsequent implementation.
Government hoped to rake in about GH¢7 billion from the collection of the 1.5 percent levy on mobile money and other electronic transactions, but the figure was revised downwards to about GH¢4 billion recently.
Meanwhile, the Ghana Revenue Authority (GRA) in October this year noted that a total of GH¢328 million in revenue has been accrued from the E-Levy so far.
Recently, there have been increasing calls for the downward revision of the levy, with the Association of Mobile Money Operators (MMOs) of Ghana making a similar call.
Meanwhile, research conducted by the Centre for Economics Finance and Inequality Studies (CEFIS), also found that if the levy was revised to 0.5 per cent, revenues would exponentially rise.
The evidence from the simulations suggested that if the levy was revised to 0.5 per cent, and 54 per cent of the existing active users patronised MoMo transactions, the expected revenue for 2022 would be GHS2,640,600,000.81.
That revenue would rise by 21.4 per cent to yield GHS3,205,688,401.01 in 2023, and in 2024, reach GHS3,635,234,306.60, and by 2025, the projected revenue from e-levy would reach GHS4,043,980,051.74.